Consolidated Edison Hits 52-Week High on Good Basics - Analyst Blog

Consolidated Edison, Inc. (ED) touched a 52-week high of $59.39 on Oct 10, finally closing a tad lower at $59.13 per share with a traded volume of nearly 3.5 million shares.

Consolidated Edison primarily engages in regulated electric, gas and steam delivery businesses in the U.S. The company, through its subsidiaries, provides natural gas and electricity to 1.2 million and 3.7 million customers respectively.

The company reported impressive second quarter earnings of 65 cents per share, surpassing the Zacks Consensus Estimate by 20.4% and the year-ago figure by 18.2%. In addition, Consolidated Edison registered positive earnings surprises in all of the last four quarters with an average beat of 2.51%. The current five-year growth estimate of the company stands at 2.8%.

Why the Rise?

The company is diversifying its generation mix through investments in solar — the 20 megawatt White River 2 and Corcoran 2 solar projects are progressing well. The addition of renewable sources will help Consolidated Edison to achieve regulatory compliance.

This Zacks Rank #2 (Buy) stock is focused on expanding its operations by investing substantially in its utility infrastructure and renewable portfolio. In the second quarter 2014, the company spent roughly $1.1 billion for the construction of utility systems. For 2014, Consolidated Edison increased its capital spending guidance for renewable energy projects from $243 million to $470 million.

Consolidated Edison forecasts capital investments of its combined subsidiaries in steam, gas and electric businesses to be $2.8 billion, $3.0 billion and $2.9 billion in the years 2014, 2015 and 2016 respectively. The company has the benefit of recapturing these infrastructural investments by way of rate hikes.

The company has consistently shared its profit with the stakeholders in the form of dividend payouts. In addition, it has taken efforts to increase dividends every year which has led to a dividend yield higher than the industry average.

Key Picks from the Sector

Other better-ranked stocks in the utility sector include IdaCorp, Inc. (IDA), Korea Electric Power Corp. (KEP) and NRG Yield, Inc. (NYLD). All three stocks sport a Zacks Rank #1 (Strong Buy).

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